Contentions

Tuesday, January 12 was a hard day for Thomas Friedman. Or at least it turned into one. That morning, the New York Times ran Friedman’s latest—and possibly last—900 word panegyric to the unstoppable wonder of China’s economy. His column had, as it occasionally does, a personal edge. He was essentially writing to the American investor James Chanos. Friedman had read that Chanos thinks the Chinese bubble is about to burst and is looking to short China’s economy for profit.

And undo all Friedman’s cheerleading??? No sir. Friedman explained to Chanos, and to us, that while China has some things to deal with, “(the most dangerous being pollution)… it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us).”

You know, it’s not the cleanest place in the world, but its wise leaders will put a few billions toward a country-wide clean-up crew (hey, maybe they can put some of those good-for-nothing Charter 8 signatories and Uighers to work!) before their world domination gets properly started. Friedman’s parting shot was all class, maturity, and circumspection: “Shorting China today? Well, good luck with that, Mr. Chanos. Let us know how it works out for you.”

I’d imagine it’s working out rather well. For on the same morning, a shortsighted, ignorant little entity of no importance called Google announced that it too was shorting China, and ceasing to do business there so long as they had to comply with Beijing’s strict censorship requirements. This puts Chanos in fairly good company.

But did Google miss the Friedman memo? China is rich and focused, “unlike us.” Moreover, as Friedman never fails to mention, “China also now has 400 million Internet users, and 200 million of them have broadband,” —unlike us, of course. Invest away. Shockingly, Google had an issue with China that went beyond the country’s investment mechanics. As the company’s statement read, “we have discovered that the accounts of dozens of U.S.-, China- and Europe-based Gmail users who are advocates of human rights in China appear to have been routinely accessed by third parties.” Human rights? What does that mean? Any regular reader of Friedman knows that China’s is a “reasonably enlightened” dictatorship. How else could they achieve what Friedman calls their “Green Leap Forward,” “the most important thing to happen” in the first decade of this century? Google, it turns out, made a principled decision.

After this news broke, I wondered how Friedman would respond. Courtesy of yesterday’s New York Times, here comes his Yellow Leap Backward: “Your honor, I’d like to now revise and amend my remarks. There is one short position, one big short, that does intrigue me in China. I am not sure who makes a market in this area, but here goes: If China forces out Google, I’d like to short the Chinese Communist Party.”

You see, he’s still bullish on China, just bearish on the Chinese Communist Party. Makes perfect sense. Kind of like cheering the rise of eggs and the simultaneous demise of chickens. If it’s a confusing proposition, never fear. There is no wrong-headed opinion that Thomas Friedman cannot reduce to a childishly digestible formulation.

There are actually two Chinese economies today. There is the Communist Party and its affiliates; let’s call them Command China. These are the very traditional state-owned enterprises.

Alongside them, there is a second China, largely concentrated in coastal cities like Shanghai and Hong Kong. This is a highly entrepreneurial sector that has developed sophisticated techniques to generate and participate in diverse, high-value flows of business knowledge. I call that Network China.

It’s rare to see one wrestle so transparently with cognitive dissonance. Friedman asserted one thing about China. That thing was proved wrong in real time. To handle the contradiction, he splits China into two parts. What he said still applies to one China, not the other. Then he quotes some Non-Fiction Best-Sellerese from a recent book by John Hagel:

“Finding ways to connect with people and institutions possessing new knowledge becomes increasingly important,” says Hagel. “Since there are far more smart people outside any one organization than inside.” And in today’s flat world, you can now access them all.

Can you really? Here’s a challenge for Tom Friedman: There is a very smart person, a scholar even, named Liu Xiiaobo. Can Friedman reach out across “today’s flat world” and get in touch with him? You see, Liu was just sentenced to eleven years for “inciting subversion of state power” by the Chinese government. If Friedman gets hold of him, he should ask Liu which China he’s in. Maybe it’s called Autocratic China or, if we’re being adult about it, just China.

Let’s make it easier on Friedman. Finding one Chinese political prisoner in a sea of them is a bit daunting. How about he reaches out to one of the 20 million inhabitants of the Xinjiang region, where the Chinese government has blacked out all online access for an area three times the size of Texas. What is that China called? Is it safe to short?

Well, good luck with that, Mr. Friedman. Let us know how it works out for you.